performance and measurement

Sales Performance – Measure the Future, Not Just the Past

Written By: Rich Mesch

Are you getting the sales performance you want? If the answer is yes, congratulations; you’ve cracked the code. But for the rest of us who are still figuring it out, let’s talk. There are many reasons sales organizations don’t get the results they want; some are within your control, and some are not. When we talk about controllable factors, it all comes down to one thing: the behavior of your sales force. Are your salespeople acting in a way that will result in more opportunities, meetings, and closed deals? How do you know?

Measurement has always been a key part of sales strategy. However, too much sales measurement is focused on the past, on things that have already happened and cannot be changed. If you’re unhappy with your year-end numbers, there’s no way to go back in time to sell more.

To use measurement to drive sales, you need to measure the future—or, more accurately, measure the behaviors that your sales team is engaged in now to determine the likelihood that they will hit future goals. Measuring the future is not difficult. The challenge is that most sales organizations have been trained not to do it. How did we get here?

Stop Using Your Top Performers as Examples

When trying to improve performance, we tend to look at our top performers and then get everyone else to do what they’re doing. While there is logic to this approach, it’s fraught with peril. When everybody plays in the same system, and some succeed while others don’t, we have to ask: is the system helping people succeed? Often your top performers succeed not because of the system but despite the system. So rather than trying to get your mid-level players to act like your top performers, you may want to take a good look at the system everybody is playing in and determine whether the system is really facilitating success.

The Double Loop and Why It Matters

Business analyst and researcher Chris Argyris contributed enormous insight into how businesses operate, grow, and adapt to new environments. He is perhaps best known for his Double Loop Learning model and the similarly-themed Ladder of Inference. The essence of both models is that businesses tend to evaluate results in a context of an established system rather than evaluate the system itself.

Here’s a metrics-driven example—a bad one! Say a sales team is measured on how many calls they make in a day. If they fail to make ten calls a day, it’s a problem. If they consistently fail to make 10 calls a day, they’re out. What’s wrong with this system?

First of all, there is no quality metric. What’s the point of making ten calls if they aren’t quality calls? And what’s the magic about the number 10? Would you rather have ten calls that result in one sale or five quality calls that result in five sales?

Argyris observed that when we don’t like our results, we tend to change our tactics. If our tactics appear sound, we evaluate our strategy. And if our tactics and strategy seem sound, we need to go back and examine the underlying assumptions we used to create our strategy.

That’s why Argyris’ work is so important—if we start with flawed assumptions, everything we do—our strategy, tactics, and behaviors—is also flawed. And that means our metrics are flawed as well. Assuming that reach and frequency mean more sales, we set a metric of 10 calls a day. As a result, we’ll probably get ten calls a day—but we may not get more sales.

Sales Measures a Lot—and Mostly the Wrong Things

So what do sales teams measure? Two items are commonly measured: results and activity.

Results are important and should be measured. But results measure what happened in the past. The past is still relevant. You should measure closed deals, account penetration, territory growth, and revenue. In most organizations, you don’t have a choice, anyway. Just remember that these are all lagging indicators. That means they measure what you were doing previously, not what you’re doing now.

And measuring activity isn’t wrong—activity is part of a set of behaviors. The challenge of measuring activity is that you tend to get what you measure; measure activity, and you’re likely to get more activity, but not necessarily more sales.

The biggest challenge of measuring activity is that it’s a stick rather than a carrot. Failure to meet your activity metrics means you’re in trouble—in fact, over time, you might lose your job if you fail to meet your metrics. And these metrics are typically mandatory, meaning that you’re obligated to hit them regardless of whether they are helping you sell or not.

And what about salespeople who post great numbers without hitting their metrics? Well, they’re succeeding despite the system, not because of it. Success is the world’s best apology.

What Should I Be Measuring?

As mentioned, there are inherent challenges and benefits to measuring results. Think of results like the scoreboard at a ball game. You can’t win a ball game by looking at the final score. You need to do it by practicing and reinforcing the right behaviors before your players hit the field—and then coaching them once they’re there.

We should be measuring the execution of strategy. How does this customer contact fit into an overall strategy of customer contacts? How are we moving the ball down the field?

We should be measuring progress. Most customers won’t make a decision based on a single contact. Influencing and convincing usually take a progression of contacts. We should also be measuring value. Let’s face it, customers only talk to salespeople because they need something. We may be convinced of the value of our product, but is the customer? Customer communications need to be customer-centric, focused on the needs of the customer, not on the wants of the seller. Once the customer sees the value, they’ll welcome the contact.

And, as for sales leaders, we should be measuring coaching. Coaching is the sales leader’s main contribution to the selling process. How often is each sales leader coaching? What is the quality of that coaching? How often is the sales leader following up with team members to ensure they ‘get it’ and are implementing their guidance?

These things can be more difficult to measure than revenue or market share, but these are the things that move the needle. Not only can these behaviors drive your top line, but they can also drive the quality of your salesforce for years to come.

Summing It Up

Almost all sales organization measure. The key to gaining value from performance indicators is measuring the metrics most likely to drive your success. Measuring results is useful, but it can only tell you what happened, not what will happen. We need to measure what we are doing now because it tells us what our success in the future is going to look like. We need to move past activity-based measurement to behavior-based measurement. And sometimes, we must rethink how we look at the world—will the behaviors we’re asking for drive the results we want?

The challenges of the last few years have dramatically changed how the world does business. There’s never been a better time to examine our models and assumptions and ask ourselves if they still work.  The sales leaders of tomorrow will be those willing to imagine, shift, and adapt.